Revaluing US gold reserves to match current market conditions would add more momentum to prices as it would signal the precious metal isn’t an anachronistic asset, according to a Wall Street analyst.
In an interview on Bloomberg TV on Friday, Francisco Blanch, head of commodities and derivatives research at Bank of America Securities, acknowledged that repricing the gold would be an accounting exercise but still result in an increase in the Federal Reserve’s balance sheet.
“I think it would probably be bullish for the gold market because it would show that gold is no longer this barbarous relic that has been sitting in central banks and been dismissed a little bit, but now even the biggest central bank of them all is taking a renewed interest in gold,” he said.
The Fed doesn’t own gold anymore after transferring it to the Treasury Department under the Gold Reserve Act of 1934. In exchange, the Fed received gold certificates.
The US owns 261.6 million troy ounces of gold, valued at a 1970s-era rate of $42.22 an ounce, producing a book value of $11 billion. At gold’s current spot price of about $2,950 per ounce, however, the value would top $750 billion. […]
— Read More: fortune.com
